2013 (6) TMI 370 - HC - Customs

Import of vessel for scrapping - who is the importer - sale it is for scrapping - ship breaking activity - foreign going vessel or not - Notification No.163/65 - held that - it is apparent that by virtue of the provisions of Notification No.163/65-Cus., at the time when the ship was to be broken up, there was a deemed import of the ship for the purpose of breaking up. As held by the Supreme Court in the case of Jalyan Udyog (1993 (9) TMI 108 - SUPREME COURT OF INDIA) even a deemed import has to be given full effect. Thus, all the necessary concomitants which go with import, would be required to be followed even in the case of a deemed import. The respondent stepped into the shoes of Shipping Corporation of India who was the original owner of the subject vessel and as such, was liable to discharge all statutory duties in respect thereof. It is an undisputed position that it is the respondent-assessee who has filed the bill of entry, albeit at the instance of the customs authorities; however, it cannot be gainsaid that prior thereto the vessel had not been cleared for home consumption after the status of the vessel was converted to a vessel intended for breaking up. In the aforesaid premises, the respondent assessee squarely falls within the definition of importer as envisaged under sub-section (26) of section 2 of the Act. Even if notification No.163/65 did not expressly provide for filing of a fresh bill of entry, such requirement has to be read into it, inasmuch as a condition precedent for importing any goods is filing of a bill of entry. Therefore, the subsequent Notification No.16/2000-Cus only makes explicit what was otherwise implicit in the earlier notification. The Tribunal has misread the decision of the Supreme Court in the case of Union of India v. Jalyan Udyog (1993 (9) TMI 108 - SUPREME COURT OF INDIA) in holding that the date on which the vessel is broken up would be the date on which it is taken for breaking i.e. the date of transfer from the Shipping Corporation of India to the respondent and not the date of beaching at Alang and on that date the importer would be Shipping Corporation of India. Decision of tribunal set aside - decided in favor of revenue.

Summary

Issues Involved:
1. Definition of "Importer" under Section 2(26) of the Customs Act, 1962.
2. Applicability of Notification No.163/65-Cus dated 16.10.1965 and its conditions.
3. Determination of the relevant date for customs duty on the vessel.
4. Rate of duty applicable under Section 15 of the Customs Act, 1962.

Detailed Analysis:

1. Definition of "Importer" under Section 2(26) of the Customs Act, 1962:
The primary issue was whether the respondent, M/s Shree Dev Krupa Ship Breaking, was an "importer" as per Section 2(26) of the Customs Act, 1962. The court noted that the definition includes any owner or any person holding himself out to be the importer at any time between importation and clearance for home consumption. The vessel was sold to the respondent before it was cleared for home consumption, making the respondent the owner during the importation process. Thus, the respondent fell within the definition of "importer."

2. Applicability of Notification No.163/65-Cus dated 16.10.1965 and its Conditions:
Notification No.163/65-Cus exempted ocean-going vessels manufactured in a warehouse from customs duty, provided that duty would be levied if the vessel was broken up. The court emphasized that the proviso created a legal fiction, shifting the date of import to the date the vessel was broken up. The court held that this fiction must be given full effect, meaning the vessel was deemed imported for breaking up on the date it was sold for scrapping.

3. Determination of the Relevant Date for Customs Duty on the Vessel:
The court referred to the Supreme Court's decision in Union of India v. Jalyan Udyog, which held that the date of breaking up should be the date when permission for scrapping was granted by the Director General of Shipping. In this case, the vessel was sold to the respondent before such permission was obtained, making the respondent liable for customs duty as the importer.

4. Rate of Duty Applicable under Section 15 of the Customs Act, 1962:
Section 15 specifies that the rate of duty is determined on the date the Bill of Entry is presented. The court noted that the vessel was not cleared for home consumption when sold to the respondent, who then filed the Bill of Entry. Therefore, the duty rate applicable was the one in force on the date the respondent filed the Bill of Entry.

Conclusion:
The court concluded that the respondent was the importer under Section 2(26) of the Customs Act, 1962. The legal fiction created by Notification No.163/65-Cus was applicable, making the respondent liable for customs duty. The relevant date for determining the duty was when the respondent filed the Bill of Entry. The Tribunal's order was quashed, and the appeal was allowed in favor of the revenue.